International Journal of Computer Science & Information Technology (IJCSIT) Vol 10, No 4, August 2018

COMPETITIVENESS OF JAPANESE SERVICE

INDUSTRIES IN CHINA
Liao Xiaoyilin

Department of Marketing,
FuJian University of Technology, FuZhou, China

ABSTRACT
The service industry is one of the pillar industries of the Japanese national economy. Many Japanese
scholars have used different perspectives in researching the service industry, but there are relatively few
studies on the competitiveness of the service industry and overseas Japanese service companies. This study
conducts an empirical study on Japanese service companies in China to understand the scale, attributes,
and features of the Japanese service industries in the Chinese market. A questionnaire have been done
among all of the Japanese service companies in China. Based on the data collected, studies on
competitiveness are used as a theoretical basis, and statistical analysis is applied to conduct factor
analysis for the empirical data, in order to grasp the main elements in competitiveness for the Japanese
service industry in China. Finally, Pearson analysis is used to clarify the correlations among elements in
competitiveness, in turn deducing the hierarchy among elements. Results show, among the competitiveness
elements of the Japanese service industry in China, capability of operational strategies within the
corporation is a core factor in promoting industrial competitiveness.

KEYWORDS
Japanese service industry, competitiveness, operational strategies, competitive strategies

1. INTRODUCTION
With the integration of the global economy, more and more foreign companies begin to invest in
China. As neighbors of China, Japan is famous for its services industry. Like all foreign
companies in China, Japanese companies faced many problems since entering the Chinese
market, but Japanese service industry enterprise's business scale expanding rapidly in China.
More and more scholars are concern about the competitiveness of service industry just like
Xiaoxi. Yan(2016), and the know-how of Japanese service industry should be studied more
clearly.

Saito Shigeo (2001) points out that when Japan implemented its national census, it specifically
divided its national industries into: primary industries including agriculture, forestry, and fishery;
secondary industries including mining, construction, and manufacturing; tertiary industries
including power/gas/water utilities, transportation/communications, wholesale and retail, finance,
insurance, and real estate. Based on these divisions, the tertiary industries are also referred to as
the service industry. His research showed that as early as the 1970s, 50% of domestic employees
were in the service industry in Japan. In the 1990s, this ratio exceeded that of commerce and
manufacturing, becoming the industry with the highest employment ratio in Japan. After the first
oil crisis, Japan's bubble economy burst. This presented a major crisis to the rapidly growing
service industry, and many visionaries began to turn their attention to the overseas market. This
was the same time when the first group of Japanese service corporations appeared in China. The
21st Century came without Japanese economic recovery. In these two decades, the world
economy constantly changed, and development of the service industry showed massive changes,
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along with the elevation of quality of life.With the rapid development of the Chinese economy,
China became a major world manufacturer. At the same time it was and continues to be a major
consumer state with 1.3 billion people. If the development of manufacturing industries affects the
standards of living, then it could be said that the service industry affects the quality of life and
the extent of social harmony. As a state with a more developed service industry among
advanced nations, it has a lot to teach the Chinese service industry.

Corporate competitiveness directly affects industrial competitiveness of a state, and industrial

competitiveness directly influences national competitiveness. This study begins with an empirical
examination of Japanese service corporations in China, focusing on factor analysis of
competitiveness of the Japanese service industry in China, as well as the correlations among
factors, to serve as a reference for the improvement of competitiveness in the operational
processes of the Chinese service industry.

2. Literature Reviews
A. Theories relating to the service industry

The service industry provides intangible products to society. Shimizu Shigeru (1990)
believes that the products in the industry have seven features that differ from the
manufacturing industry. Nomura Kiyoshi (1989) pointed out that the main problems in
development of corporations in the Japanese service industry were: (1) Participation of the
demand side in the product creation process results in poor efficiency in the production plan, (2)
the inability to interchange time and space, (3) difficulties in quality control, (4) difficulties in
cost management, (5) high consumer costs and many complaints, and (6) high pressure on service
personnel. Due to the lateness of development in the service industry, there are also problems
such as (1) delayed mechanization, (2) diversity in price forms, (3) no legal protection for
software and knowledge technology, (4) delay in social perceptions, (5) relatively late
introduction of operational management theory, and (6) the industry has not received policy
attention.

B. Theories on competitiveness

Gelinier. Octave/Hayashi Yujiro (1968) use the perspective of structural biology to point out
that to be competitive, corporations should have three systems: the decision-making system, the
assessment system, and the sanctions system. Poter,M.E(1990) proposes the diamond model
concept, pointing out that factors of competitive advantages for countries include: 1. Production
elements; 2. Demand conditions; 3. Relevant and support provision industries; 4. Corporate
strategies, structures, and competitive forms; 5. Government support; 6. Opportunities. Hu Dali
(2001) provides clear definitions of the relationships among corporate competitiveness, industrial
competitiveness, and international competitiveness. He points out that industries are categorized
to satisfy social needs based on certain principles in the social division of labor in the national

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economy, resulting in various sectors that produce and manage products and labor. Corporations
are the fundamental drivers of the industrial and national economy, as well as the concrete
participants in all economic activity. Corporate competitiveness determines industrial
competitiveness, and in turn determines the level of international competitiveness (as in Figure
2).

In accordance with Poter, M.E's diamond model and the content of industrial competitiveness,
Rui Mingjie(2004) constructed a new diamond model (see Figure 3). He believes that the present
and future of Chinese industrial development requires cultivation of its own abilities in absorbing
knowledge and in innovation, then further participate in the international industrial division of
labor, seek a good position in the industrial chain and, in turn, maintain development of
its industrial competitiveness in the global market. In addition, Rui Mingjie (2006) points out in
Growth and Innovation of Knowledge Corporations that the formation of corporate competitive
advantages primarily involves three dimensions, or the source of corporate competitive
advantage, drive for stable competitive advantage, and orientation of competitive advantage.
Different operational strategies are formed in dealing with these three different issues.

Fig. 2 Relationships among corporate competitiveness, industrial competitiveness, and international

competitiveness

Fig.3 Rui Mingjie's competitiveness model

Fig.4 Elements of corporate competitiveness

Gui Zhaoming (2008) believes that core corporate competitiveness is comprised of three parts:
the core is technology; the second level is organization, since only good systems and
management can allow technology to become profitable products or services; the outermost layer
is culture (as in Figure 4). Fan Lingen (2010) summarizes the developmental evolution of
corporate competitiveness with three stages: the first stage has production or cost management as
its core; the second stage is moving from production to marketing, which is the first strategic
transfer of corporate competitiveness; the third stage is moving from marketing to

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innovative value competition, which is the second strategic transfer of corporate
competitiveness.
Based on the researches mentioned above, there is a question which want to be solve in this paper
is that "What's the relationship within the competitive strategy, the competitors, the operational
strategy, the corporate profitability, the corporate characteristics and the market strategy
about the Japanese service industry in China? ".

Fig. 5 The problem formulation of this study

3. RESEARCH METHODOLOGY AND HYPOTHESES

These theories show that corporate competitiveness guarantees of industrial competitiveness;
corporate competitiveness affects and supports the development of industrial competitiveness.
Many scholars have researched industrial competitiveness and its current state from the
perspectives of human resources management and employment. For instance, Japanese
scholars Tanaka Shigeru /Nomura Kiyoshi (1983) uses the perspectives of production and
employment structure to conduct quantitative analysis on the Japanese service industry; in
regards to the strategic research theory of overseas Japanese corporations, Okamoto Yasuo
(1998) uses empirical research to confirm that Japanese corporations in East Asia have 3 basic
strategies, which are globalized market strategy, on-site market strategy and overseas
market strategy, and on-site market strategy; Takahashi Hideo (1992) points out that when
corporations in the service industry establish strategic plans, they must undergo 4 stages.
The first stage is to conduct general analysis of consumer and customer needs and to clarify the
business scope and corporate mission of the corporation; the second stage is to orient service
products to the market; the third stage is to further analyze consumer and customer needs, the
competitive environment, and market opportunities; the fourth stage is to establish the
strategic plan. Rui Mingjie, Tao Zhigang et al. (2004) use a macro and corporate perspective
in a qualitative analysis of competitiveness in the automobile business, computer business,
commercial banking business, telecommunications operation business, transportation and travel
business, and biomedical business. Yoshimura Koji (2006) points out corporations seek to
realize economic profits and construct their own competitive advantages in response to
competition with competitors and, at the same time, he pointed out that there are close
connections between operational strategies and competitive strategies. In addition, Fan Lingen
(2010) and Gui Zhaoming (2008) research the assessment models and methods of corporate
competitiveness. This study begins with corporate competitiveness in empirical research to
understand the competitiveness factors in the Japanese service industry in China. After referring
to Gui Zhaoming's (2008) corporate competitiveness assessment indicators and Fan Lingen's
(2010) composite assessment indices, as well as the features of the service industry that are
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distinct from the manufacturing industry, the study designs a questionnaire with 5 parts: 1. Basic
corporate orientation, 2. Operational management ability, 3. Market adaptability, 4.
Competitive advantages, and 5. Resource usage ability (TABLE 1).

Do the previously discussed theories relating to the service industry and competitiveness apply
to the Japanese service industry? Does competitiveness in the Japanese service industry
involve special factors? How are these factors related? These issues are answered by this study
using empirical research and statistical analysis. The specific steps are to use these 5 categories
and 23 items to conduct factor analysis of the data to derive the factors of the Japanese service
industry, using correlation analysis to discover the correlation among factors of
competitiveness in the Japanese service industry. The research model is shown in Figure 6.

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Questionnaire project design Category Relevant studies

1.The industry to which your 1 Tanaka
company belongs has an effect on the Shigeru
choice of operational strategies. /Nomura Kiyoshi (1983)
2.The engagement method of your 1 Okamoto
company has an effect on the choice Yasuo
of operational strategies. (1998)
3.The business content of your 1 Takahashi
company has an effect on the choice Hideo
of operational strategies. (1992)
4. The operational strategy of your 1 Yoshimura
company has an effect on the on-site Koji (2006)
business strategy.
5.The on-site strategy of your 1 Yoshimura
company has an effect on Koji (2006)
competitive strategies.
6.The operational strategy of your 2 Yoshimura
company has an effect on the choice Koji (2006)
of competitive strategies.
7.The operational strategy of your 2 Yoshimura
company has an effect on the Koji (2006)
understanding of the competitive
situation.
8.The operational strategy of your 2 Okamoto
company has an effect on the main Yasuo
competitors. (1998)
9. The operational strategy of your 3 Okamoto
company is an on-site market Yasuo
intention strategy. (1998)
10. The operational strategy of your 3 Okamoto
company is on-site market and Yasuo
foreign market-based strategy. (1998)
11. The operational strategy of your 3 Okamoto Yasuo (1998)
company is a global-based strategy.
12. The main competitors of your 3 Okamoto
company are non-Japanese Yasuo
13. The main competitors of your 3 Okamoto
company are local businesses. Yasuo
14. The main competitors of your 3 Okamoto
company are other Asian companies Yasuo
15. The basic strategy for 4 Poter,M.E(
competition at your company is a 1985)
16. The basic strategy for 4 Poter,M.E(
competition at your company is a 1985)
17. The basic strategy for 4 Poter,M.E(
competition at your company is a 1985)
18. The main competitive advantage 4 Haneda
of your company is service quality. Masubumi(
19. The main competitive advantage of 4 Haneda
your company is price. Masubumi(
20. The main competitive advantage of 4 Haneda
your company is sales technique Masubumi(

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21. Oppositional relationships in the same 5 Poter,M.E(
industry is the main factor 1985) TABLE
22. Buyer negotiation ability is the main 5 Poter,M.E( 1
factor determining the 1985)
23. Seller negotiation ability is the main 5 Poter,M.E(
factor determining the profitability of the 1985)

Questionnaire project design

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 Fig.6 The research model in this study

4. ESTIMATION
RESULTS
This study mails questionnaires to 384 Japanese service corporations in China listed in Summary
of Corporations with Overseas Engagement published by Toyo Keizai Inc. in 2011. Other than
34 that were returned due to incorrect addresses, 350 successfully received their questionnaires.
Among them, 114 are logistical companies at 33% of the total, 78 are consultancy companies at
22% of the total; 158 are other types of service companies (hospitality, finance, design, real
estate agency) at 45% of the total. By November 2011, 67 questionnaires were retrieved, and 2
invalid questionnaires were discarded. Ultimately, 65 valid questionnaires were retrieved (see
TABLE 2). Among them, 22 are logistical companies at 34% of the total, 7 consultancy
companies at 11% of the total, and 36 are other types of service companies (hospitality, finance,
design, real estate agency) at 55% of the total. Among these 65 Japanese service corporations, 2
are cooperating companies, 23 are joint ventures, and 40 are sole proprietorships.

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Note: Extraction method: Principal Components Analysis; rotation method: Varimax with
Kaiser Normalization

TABLE 2 summarizes the corporate features of this survey. Among the retrieved questionnaires,
22 are logistical companies, 7 are consultancy companies, and 36 companies in other categories,
for a total of 65 companies. With literature summary as a basis, when this study constructs
competitiveness factors, it uses the basic orientation, operational management ability, market
adaptability, competitive advantages, and resource usage ability scales as the main indicators for
management. After summarizing the research literature, this study combines certain overlapping
factors in the theories and synthesizes the portions outside of overlaps, summarizing 23 items for
testing the influential factors of competitiveness in Japanese service companies. Among the 23
items, the side of the 5 indicators summarized from literature reflects the perceptions and
assessments of Japanese service companies in the operational process in regards to the elements
of competitiveness. In order to further compress and summarize these 23 items, this study uses
statistical software SPSS19.0 to conduct factor analysis. Before factor analysis, Bartlett’s test of
sphericity and KMO test are conducted on the 23 evaluation items, and the result shows that the
correlation matrix is not a unit matrix, and the factors show significant correlation (Approx.Chi-
Square=442.326, Sig.=0.000<0.001), thus it is determined that the sample data is suitable for
factor analysis.

Principal component analysis method is used to conduct rotation and to delete the items that
have not reached the target, such as Item 2, Project 11, Project 16, Item 17, Item 18, and Item 20,
then the remaining 17 items are combined into six factors, and the accumulated difference
explanation is 71.571%. The factors are named based on the items within the factors, which are
operational strategies, competitive strategies, corporation attributes, corporate profitability,
competitors, and market strategies (see TABLE 4).

The six factors derived by factor analysis are used (factors: operational strategies, competitive
strategies, corporation attributes, corporate profitability, competitors, and market strategies) for
correlation analysis to derive the correlation coefficients among factors, as shown in TABLE 5.
The correlation coefficients with greater significance are operational strategies and competitive
strategies, operational strategies and corporation attributes, and operational strategies and
competitors (0.001<P<0.01), the significance rates of correlation coefficients are second highest
for operational strategies and corporate profitability, competitive strategies and corporate
profitability, and competitive strategies and competitors (0.01<P<0.05).
Correlation is used to arrange the position of factors, as shown in Figure 7. Operational strategy
is significantly correlated with four other factors; competitive strategy is significantly correlated
with 2 other factors. Among all factors, only market strategy had no significant correlation with
any other factor. This shows that operational strategies and competitive strategies occupy core
positions among competitiveness factors.
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 Fig.7 Correlation of competitiveness factors in the Japanese service industry

Note: double-ended arrows mean correlation, “strong” means strong correlation, “weak” means
weak correlation. Among them, market strategy has no significant correlation with other factors.

5. CONCLUSIONS
This study surveyed the competitiveness of the Japanese service industry. Questionnaires were
designed based on Chinese and foreign theoretical bases, and questionnaires were mailed to 350
Japanese service corporations in China with correct addresses, which were statistically analyzed
using the statistical software SPSS19.0. Ultimately, data from 65 corporations was successfully
retrieved and validly incorporated into statistical analysis. Among them, 22 are logistical
companies, 7 are consultancy companies, and 36 are other types of service companies. From the
ways in which these 65 Japanese service corporations entered the Chinese market, we can see
most are sole proprietorships, at 40, followed by those that are joint ventures, at 23, and the
fewest were 2 cooperative companies. Factor analysis shows that the competitiveness factors of
these corporations can be summarized as operational strategies, competitive strategies,
corporation attributes, corporate profitability, competitors, and market strategies. These six
factors have a guiding effect on the competitiveness of the Japanese service industry. Further
correlation analysis is used to explore the relationships among these factors, showing that
operational strategies has significant correlation with four other factors, while competitive
strategies has significant correlation with two other factors. Among all factors, only market
strategies did not show a significant correlation with any other factor. This results in the
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conclusion that operational strategies and competitive strategies have a core position among
competitiveness factors.

Results of this study can serve as a reference for theoretical researchers and a practical guide for
the service industry. The emphasis and effective operation of corporations in operational
strategies and competitive strategies can effectively elevate corporate competitiveness and, in
turn, elevate the overall competitiveness of the industry. This study only covered 65 companies,
and it is hoped that the data from these 65 companies can be used to deduce the overall situation.
However, it is insufficient to represent all the data. Henceforth, the focus should be on the
structure of the domestic service industry and competitiveness research, as well as of other
foreign-capital service companies

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